New twist in Infosys saga, firm's board members offer to resign

Nilekani, the report claimed, wants to make a comeback on a clean slate. His arrival will mean that the board will have to be reconstituted.

ET Online

August 24, 2017, 14:38 IST

In a fresh twist to the ongoing Infosys saga, the IT bellwether's board offered to resign on Thursday, according to an ET Now report. The channel claimed that the entire board of the firm, barring Punita Sinha and Roopa Kudwa have offered to resign, paving way for Nandan Nilekani to step in as a crisis manager for the firm.

Nilekani, the report claimed, wanted to make a comeback on a clean slate.

He will come for a predetermined period with the aim of achieving a bunch of predetermined goals, mainly identifying the next CEO and giving him enough air cover to find his bearing in the top job. Restoring investor, customer and employee confidence in the company will be another priority.

Nilekani, who until the weekend was very sure that he would not take a formal position in Infosys -he quit in 2009 to join the Manmohan Singh government as chairman of UIDAI -was persuaded to rethink by well-wishers, big investors and crucially some board members. Infosys co-chairman Ravi Venkatesan and independent directors Kiran Mazumdar Shaw and D N Prahlad spent several hours at his home on Monday. Sources say things are still fluid at the moment with Nilekani yet to sign off formally on his comeback because a number of things ­ including a buy-in by founder N R Narayana Murthy into this plan -have to fall in place before a formal announcement. Said a source, “The math has to work out for Nilekani to return. It's almost certain that he will come back as a non-executive chairman, but it's not a done deal yet.“

On a hectic Wednesday, things started moving quickly once it became public that Murthy had cancelled an investor call scheduled for the evening.Though the reason given was ill health, it's believed it was also to allow all the different pieces that are in motion now to play out.

Twelve domestic mutual funds and insurance companies told the Infosys board on Wednesday morning that they want Nilekani to return in a “suitable capacity“.Talks are ongoing with a few of the large, international investors.

Nilekani's arrival will also mean that the board will have to be reconstituted. According to sources three to four directors are set to resign: chairman R Seshasayee, directors Roopa Kudva and Jeff Lehman.Possibly even co-chairman Ravi Venkatesan.

The directors who seem safe are D N Prahalad, who is a distant relative of Narayana Murthy's and joined the board in October 2016; D Sundaram, the latest to join the Infosys board (June 2017), and Punitha Kumar Sinha. Though Biocon chairman Kiran Mazumdar Shaw is a close friend of both Murthy's and Nilekani's, it isn't clear whether she will stay or go.

Unless a director resigns, a board member can be removed only through an extraordinary general meeting at which the resolution has to be passed by a majority of the shareholders.It's believed nobody wants to go down that path with resignations on the cards.

It will be interesting to see if the company's former chief executive Vishal Sikka, who on Friday last said he would stay till March 31, 2018 as executive vice chairman, will quit with immediate effect or stay . He will probably opt to go.

It appears that on Wednesday Nilekani and Murthy were locked in talks, with sources saying that Nilekani wanted some assurances before committing to return to Infosys. It's speculated that as Nilekani is returning only for a `predeter mined' period, it would be advisable to have a founder on the board. It will be interesting to see if Murthy agrees to join the board under Nilekani's chairmanship.

Nilekani, who has cancelled a long-planned two-month visit to the US, is the third largest founder shareholder of Infosys with a 2.3% stake. He succeeded Murthy as CEO in 2002 and had a 5-year stint before making way for Kris Gopalakrishnan as per Murthy's desire to give all the founders a shot at the top job. Between demitting the CEO's post and joining UIDAI, he wrote an influential book 'Imagining India,' which was a best seller.

So it looks like the self-described “plumber“ to the nation has to return, however reluctantly, to bail out a company he so famously co-founded 36 years ago. Nilekani, who as Aadhaar architect helped roll out government's ambitious identity programme which today underpins much of the government's direct benefits programme and is essential to file IT returns as well as get cooking gas at home, will have to return to the C-suite to get a new identity for Infosys.